Forecast

Malloy wants to hike minimum wage in election year

Bill Cummings| on February 5, 2014

Gov. Dannel P. Malloy on Tuesday promised to raise the state's minimum wage to the highest level in the nation and accomplish it during an election year.

Malloy, a Democrat who is expected to seek re-election in November, said he will submit legislation to the General Assembly to gradually raise the hourly minimum wage to $10.10 in January 2017, a $1.40 increase from the current rate of $8.70.

The proposal mirrors a push by national Democrats to battle income inequality as the difference between the top 1 percent of wage earners and the rest of the nation dramatically increases.

President Barack Obama recently raised the minimum wage for new federal contracts to $10.10, and used his State of the Union speech to push Congress to make that wage the federal standard, a move congressional Republicans are likely to oppose.

Malloy acknowledged the ongoing national debate as he announced his support for legislation to do the same in Connecticut.

"Now that we can do this, we should do it," Malloy said, referring to an improving economy and projected $500 million surplus in the current state budget.

"If anyone is against this, then I ask them to answer one question: Would you work for it?" Malloy said, referring to the minimum wage.

Raising the minimum wage is only the latest in a series of populist proposals from the governor as the General Assembly begins a new session Thursday and the gubernatorial campaign heats up.

Malloy has proposed a $450 million package of middle class tax breaks, including a $55 annual rebate for individuals earning less than $200,000 a year and $110 for joint filers earning less than $400,000 a year. The tax breaks would be paid for by diverting $155 million in gas and sales taxes.

Additionally, the governor proposed cutting in half over two years the amount of pension income on which retired teachers pay taxes, along with several other smaller tax breaks, for a total package of $228 million.

Told by a reporter during a Bridgeport news conference that his recent proposals look like election year giveaways, Malloy denied playing politics.

"What it should look like is I'm trying to do the right thing," Malloy said.

Just a few blocks from where the governor made his Bridgeport appearance, Val Fernades, who employs minimum wage workers at his Funchal Cafe on Lafayette Boulevard, greeted the news of a potentially higher minimum wage with concern.

He said he supports helping low wage workers, but raising the minimum wage will hurt small businesses like his own.

"You have got to pay more and still have the same sales," Fernades said. "Our prices stay the same, but the cost of food is going up. People need to live -- but little businesses can't survive."

State Democratic leaders, such as House Speaker Brendan Sharkey and Senate President Donald Williams, quickly supported raising the wage while Republican leaders opposed it, indicating the issue will likely spark a clash within the General Assembly.

"One of the best ways to improve conditions for low-wage workers is to modestly raise the minimum wage and help lift thousands of workers out of poverty," Williams said.

House Minority Leader Larry Cafero, R-Norwalk, said the state's economy is not yet strong enough to again raise the minimum wage. Connecticut raised the minimum wage last year and the final phase, to $9 an hour, takes effect next January.

"I think it needs to be adjusted but in bad times it can hurt the people it purports to help," Cafero said. "A few dollars per hour can mushroom into thousands of dollars a year (for business owners)."

Senate Minority Leader John McKinney, R-Fairfield and a candidate for governor, said small business owners are hurt by constant increases to the minimum wage.

"It's not just entry level wages. Everyone else along the chain will have to be paid more. Many will give less hours or hire less people. Small businesses are not doing well," McKinney said.

Cafero said Malloy's new support for the minimum wage is curious, considering he was lukewarm to the idea two years ago.

"Two years ago, he put the brakes on any proposal to raise the minimum wage," Cafero said. "For him to come out for it now, with the economy not turning around, seems inconsistent and very consistent with the Democratic playbook given to governors across the country."

Peter Gioia, an economist with the Connecticut Business and Industry Association, also said raising the wage can do more harm than good.

"You will see their hours cut and fewer get hired and some get laid off," Gioia said. "That's not what you want to do in a state that has not recovered all the jobs from the Great Recession. It will cause recalculations across industries. If it happened on a federal level, we would not be looked as an outlier."

Malloy defended raising the minimum wage, saying it's a way to move toward a more equitable society.

"We are trying to move forward and have a stronger middle class," he said. "The minimum wage provides a starting point. The economy is better and stronger, and there is a national debate over inequality. The American people are overwhelmingly in favor of (raising the minimum wage)."

The governor pointed to a projected $500 million surplus as proof of an improving state economy. Malloy wants to place $250 million from the surplus in the state's rainy day fund and use $100 million to shore up state pensions.

"Raising the minimum wage will create jobs -- it will put more cash into the pockets of the people who need it and who will also spend it in their communities. That will give local economies a big boost," Murphy and Blumenthal said in a joint statement.

"Gov. Malloy knows that $9 is not enough, and we're glad he is leading on this issue," Farrell said. "Once again, Connecticut has the chance to be a national leader when it comes to bread and butter economic issues. Everyone who works full time should be able to afford to survive, and this gets us closer to that goal," Farrell said.

Bridgeport Mayor Bill Finch, who said city workers made far more than minimum wage, also supported raising the wage.

"We are excited about this," said Finch, also a Democrat. "The people who work for the minimum wage are, by and large, from the cities. The people at the bottom rung are often forgotten. It's difficult to make ends meet."

House Speaker Brendan Sharkey added: "Connecticut helped start the conversation when it comes to a $10 minimum wage, and I support the governor on leading the way again. This will help tens of thousands of struggling working families and add hundreds of millions of dollars to our economy."

In neighboring New York state, Senate Democrats have introduced legislation to accelerate the state minimum wage hike to $9 within a year and -- failing that -- free cities and towns to raise the minimum pay rate within their own borders.